October 14, 1998 2:00 PM PDT

Tech bills face 11th-hour rush

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Congress is attempting to keep the government funded this fiscal year and pass a handful of new Net regulations--all before the clock strikes midnight.

For high-tech executives--who can be out of the Capitol Hill loop but are no strangers to tough negotiating tactics--the past few days should have provided a crash course on the last-minute political wrangling that goes on when lawmakers have to wrap up the legislative session so they can stump for November elections.

With impeachment hearings looming, the allegations against President Clinton have left not only critical legislation hanging in the balance as the clock runs out, but the nation's leader as well.

Despite the chaos, Congress tries to make time for everyone. And legislators are scrambling now to pass regulations that will hit home with the online industry and Net users alike.

From limiting taxation on Net access and services to prohibiting Web sites from giving minors access to adult-oriented material, a variety of proposals are expected to be tacked on to a massive federal appropriations package that Congress must pass by midnight--its current deadline to adjourn.

Online content restrictions
As reported yesterday, a controversial provision could be added to the omnibus spending bill that would make it a crime for commercial Web sites to give minors access to "harmful material."

Called the "Communications Decency Act II" by opponents, the legislation differs in the Senate and House versions. But both Sen. Dan Coats's (R-Indiana) bill and Rep. Mike Oxley's (R-Ohio) Child Online Protection Act would require site operators who offer "harmful" material to check visitors' identifications or face up to $50,000 in fines and six months in prison.

Although the Clinton administration and civil liberties advocates question the constitutionality of the bills, proponents have been working just about every angle to get one of them passed.

Net tax time-out
Another embattled bill that could piggyback the spending bill is the Internet Tax Freedom Act, which sets up a national three-year moratorium on "discriminatory" taxes on Net access and services. The Senate and House versions of the bill preserve taxes enacted before October and March of this year, respectively.

The Net tax bill also includes another Coats proposal, one to exempt commercial sites from the tax break if they give minors unfettered access to "harmful" material, and online privacy protections for children under 12.

Foreign high-tech workers
Finally, the computer industry is hoping to see one last proposal passed as part of the huge appropriations bill--Rep. Lamar Smith's (R-Texas) Workforce Improvement and Protection Act, which would almost double the number of highly skilled technology workers allowed into the country each year.

The White House now supports Smith's legislation, which was affixed to the omnibus spending bill yesterday. The bill would boost the number of H1-B visas for technical and well-educated workers from 65,000 to 115,000 for 1999 and 2000 and return it to the current level by 2002. However, a select number of high-tech companies that hire many H1-B employees will be subject to increased Labor Department monitoring.

The bills impose stiffer penalties for firing an American worker in favor of an H1-B visa holder, and for paying foreign workers lower wages than their American counterparts.

Clinton is expected to sign the following bills, which passed Congress this week:

  • The Digital Millennium Copyright Act, cleared Monday, would impose new safeguards for software, music, and written works on the Net, and would outlaw technologies that can crack copyright protection devices. One provision would require Webcasters--such as the budding group of Net radio stations--to pay licensing fees to record companies, which could take a large chunk out of their gross revenues.

  • The Securities Litigation Uniform Standards Act, passed yesterday, would limit lawsuits against companies with volatile stock prices by requiring class-action shareholder suits brought against companies for failed earnings to be filed in federal court. Proponents say the statute will protect the slew of public high-tech start-ups from being sued in every state, arguing that such suits have the potential to stifle the growing computer industry.

  • The Child Protection and Sexual Predator Punishment Act applies stiff penalties for using the Net to sexually solicit minors or knowingly send "obscene" material to a person under 16. Violators could get up to five and ten years in prison, respectively, for the offenses.

    The bill also sticks Net access providers with new liabilities for failing to report child pornography once they are made aware of the illegal material. ISPs could be fined up to $50,000 the first time they fail to report the activity and up to $100,000 for each subsequent time they don't contact law enforcement authorities.

    Civil liberties groups say the ISP penalties could force providers to police their customers.

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